BILL NUMBER: AB 2899	CHAPTERED  09/29/00

	CHAPTER   858
	FILED WITH SECRETARY OF STATE   SEPTEMBER 29, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 28, 2000
	PASSED THE SENATE   AUGUST 30, 2000
	PASSED THE ASSEMBLY   MAY 18, 2000
	AMENDED IN ASSEMBLY   APRIL 24, 2000

INTRODUCED BY   Committee on Health (Gallegos (Chair), Bates (Vice
Chair), Aanestad, Corbett, Cox, Firebaugh, Kuehl, Runner, Thomson,
Vincent, Wayne, Wesson, and Zettel)

                        MARCH 14, 2000

   An act to amend Section 4019 of the Business and Professions Code
and to amend Sections 14087.32, 14087.36, and 14139.53 of the Welfare
and Institutions Code, relating to health care.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2899, Committee on Health.  Medi-Cal.
   (1) The Pharmacy Law provides that an order entered on the chart
or medical record of a hospital patient shall be considered a
prescription if specified conditions are met, including that the
practitioner authorized by law to prescribe drugs signs the order, if
he or she is present when the drugs are given, and if not present at
that time, signs the order on his or her next visit to the hospital.

   This bill would additionally authorize in the latter circumstance
the attending physician responsible for the patient's care at the
time the drugs are given to the patient to sign the order.
   (2) Existing law provides for the Medi-Cal program, administered
by the State Department of Health Services, under which qualified
low-income persons are provided with health care services.
   This bill would make technical changes to existing law relating to
the Medi-Cal program.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 4019 of the Business and Professions Code is
amended to read:
   4019.  An "order," entered on the chart or medical record of a
patient registered in a hospital or a patient under emergency
treatment in the hospital, by or on the order of a practitioner
authorized by law to prescribe drugs, shall be authorization for the
administration of the drug from hospital floor or ward stocks
furnished by the hospital pharmacy or under licensure granted under
Section 4056, and shall be considered to be a prescription if the
medication is to be furnished directly to the patient by the hospital
pharmacy or another pharmacy furnishing prescribed drugs for
hospital patients; provided that the chart or medical record of the
patient contains all of the information required by Sections 4040 and
4070 and the order is signed by the practitioner authorized by law
to prescribe drugs, if he or she is present when the drugs are given.
  If he or she is not present when the drugs are given, the order
shall be signed either by the attending physician responsible for the
patient's care at the time the drugs are given to the patient or by
the practitioner who ordered the drugs for the patient on the
practitioner's next visit to the hospital.
  SEC. 2.  Section 14087.32 of the Welfare and Institutions Code, as
amended by Chapter 525 of the Statutes of 1999, is amended to read:
   14087.32.  Commencing on the date the authority first receives
Medi-Cal capitated payments for the provision of health care services
to Medi-Cal beneficiaries and until a commission established
pursuant to Section 14087.31 is in compliance with all the
requirements regarding tangible net equity applicable to a health
care service plan licensed under Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code, all of the
following shall apply:
   (a)  The commission may select and design its automated management
information system.  The department, in cooperation with the
commission, prior to making capitated payments, shall test the system
to ensure that the system is capable of producing detailed,
accurate, and timely financial information on the financial condition
of the commission, and any other information that is generally
required by the department in its contracts with other health care
service plans.
   (b)  In addition to the reports required by the Department of
Managed Care under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, and the rules of the
Director of the Department of Managed Care promulgated thereunder, a
commission established pursuant to Section 14087.31 shall provide, on
a monthly basis, to the department, the Department of Managed Care,
and the members of the commission, a copy of the automated report
described in subdivision (a) and a projection of assets and
liabilities, including those that have been incurred but not
reported, with an explanation of material increases or decreases in
current or projected assets or liabilities.  The explanation of
increases and decreases in assets or liabilities shall be provided,
upon request, to a hospital, independent physicians' practice
association or community clinic, which has contracted with the
authority to provide health care services.
   (c)  In addition to the reporting and notification obligations the
commission has under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, the chief executive officer
or director of the commission shall immediately notify the
department, the Department of Managed Care, and the members of the
commission, in writing, of any fact or facts that, in the chief
executive officer's or director's reasonable and prudent judgment, is
likely to result in the commission being unable to meet its
financial obligations to health care providers or to other parties.
The written notice shall describe the fact or facts, the anticipated
fiscal consequences, and the actions which will be taken to address
the anticipated consequences.
   (d)  The Department of Managed Care shall not, in any way, waive
or vary, nor shall the department request the Department of Managed
Care to waive or vary, the tangible net equity requirements for a
commission under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, after three years from the
date of commencement of capitated payments to the commission.  Until
the commission is in compliance with all of the tangible net equity
requirements under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, and the rules of the
Director of the Department of Managed Care adopted thereunder, the
commission shall develop a stop-loss program appropriate to the risks
of the commission, which program shall be satisfactory to both
department and the Department of Managed Care.
   (e) (1)  If the commission votes to file a petition of bankruptcy,
or the county board of supervisors notifies the department of its
intent to terminate the commission, the department shall immediately
transfer the authority's Medi-Cal beneficiaries as follows:
   (A)  To other managed care contractors, when available, provided
those contractors are able to demonstrate that they can absorb the
increased enrollment without detriment to the provision of health
care services to their existing enrollees.
   (B)  To the extent that other managed care contractors are
unavailable or the department determines that it is otherwise in the
best interest of any particular beneficiary, to a fee-for-service
reimbursement system pending the availability of managed care
contractors provided those contractors are able to demonstrate that
they can absorb the increased enrollment without detriment to the
provision of health care services to their existing enrollees, or the
department determines that providing care to any particular
beneficiary pursuant to a fee-for-service reimbursement system is no
longer necessary to protect the continuity of care or other interests
of the beneficiary.
   (2)  Beneficiary eligibility for Medi-Cal shall not be affected by
actions taken pursuant to paragraph (1).
   (3)  Beneficiaries who have been or who are scheduled to be
transferred to a fee-for-service reimbursement system or managed care
contractor may make a choice to be enrolled in another managed care
system, if one is available, in full compliance with the federal
freedom-of-choice requirements.
   (f) (1)  A commission established pursuant to Section 14087.31
shall submit to a review of financial records when the department
determines, based on data reported by the commission or otherwise,
that the commission will not be able to meet its financial
obligations to health care providers contracting with the commission.
  Where the review of financial records determines that the
commission will not be able to meet its financial obligations to
contracting health care providers for the provision of health care
services, the Director of Health Services shall immediately terminate
the contract between the commission and the state, and immediately
transfer the commission's Medi-Cal beneficiaries in accordance with
subdivision (e) in order to ensure uninterrupted provision of health
care services to the beneficiaries and to minimize financial
disruption to providers.
   (2)  The action of the Director of Health Services pursuant to
paragraph (1) shall be the final administrative determination.
Beneficiary eligibility for Medi-Cal shall not be affected by this
action.
   (3)  Beneficiaries who have been or who are scheduled to be
transferred under subdivision (e) may make a choice to be enrolled in
another managed care plan, if one is available, in full compliance
with federal freedom-of-choice requirements.
   (g)  It is the intent of the Legislature that the department shall
implement Medi-Cal capitated enrollments in a manner that ensures
that appropriate levels of health care services will be provided to
Medi-Cal beneficiaries and that appropriate levels of administrative
services will be furnished to health care providers.  The contract
between the department and the commission shall authorize and permit
the department to administer the number of covered Medi-Cal
enrollments in such a manner that the commission's provider network
and administrative structure are able to provide appropriate and
timely services to beneficiaries and to participating providers.
   (h)  In the event a commission is terminated, files for
bankruptcy, or otherwise no longer functions for the purpose for
which it was established, the county shall, with respect to
compensation for provision of health care services to beneficiaries,
occupy no greater or lesser status than any other health care
provider in the disbursement of assets of the commission.
   (i)  Nothing in this section shall be construed to impair or
diminish the authority of the Director of the Department Managed Care
under Chapter 2.2 (commencing with Section 1340) of Division 2 of
the Health and Safety Code, nor shall anything in the section be
construed to reduce or otherwise limit the obligation of a commission
licensed as a health care service plan to comply with the
requirements of Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code and the rules of the
Director of the Department of Managed Care adopted thereunder.
   (j)  Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to the Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government Code),
including but not limited to, those pertaining to trade secrets and
information withheld in the public interest, shall be fully
applicable for all state agencies and local agencies with respect to
all writings that the commission is required to prepare, produce or
submit pursuant to this section.
  SEC. 3.  Section 14087.36 of the Welfare and Institutions Code, as
amended by Chapter 525 of the Statutes of 1999, is amended to read:
   14087.36.  (a) The following definitions shall apply for purposes
of this section:
   (1) "County" means the City and County of San Francisco.
   (2) "Board" means the Board of Supervisors of the City and County
of San Francisco.
   (3) "Department" means the State Department of Health Services.
   (4) "Governing body" means the governing body of the health
authority.
   (5) "Health authority" means the separate public agency
established by the board of supervisors to operate a health care
system in the county and to engage in the other activities authorized
by this section.
   (b) The Legislature finds and declares that it is necessary that a
health authority be established in the county to arrange for the
provision of health care services in order to meet the problems of
the delivery of publicly assisted medical care in the county, to
enter into a contract with the department under Article 2.97
(commencing with Section 14093), or to contract with a health care
service plan on terms and conditions acceptable to the department,
and to demonstrate ways of promoting quality care and cost
efficiency.
   (c) The county may, by resolution or ordinance, establish a health
authority to act as and be the local initiative component of the
Medi-Cal state plan pursuant to regulations adopted by the
department.  If the board elects to establish a health authority, all
rights, powers, duties, privileges, and immunities vested in a
county under Article 2.8 (commencing with Section 14087.5) and
Article 2.97 (commencing with Section 14093) shall be vested in the
health authority.  The health authority shall have all power
necessary and appropriate to operate programs involving health care
services, including, but not limited to, the power to acquire,
possess, and dispose of real or personal property, to employ
personnel and contract for services required to meet its obligations,
to sue or be sued, and to take all actions and engage in all public
and private business activities, subject to any applicable licensure,
as permitted a health care service plan pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code.
   (d) (1) (A) The health authority shall be considered a public
entity separate and distinct from the county and shall file the
statement required by Section 53051 of the Government Code.  The
health authority shall have primary responsibility to provide the
defense and indemnification required under Division 3.6 (commencing
with Section 810) of Title 1 of the Government Code for employees of
the health authority who are employees of the county.  The health
authority shall provide insurance under terms and conditions required
by the county in order to satisfy its obligations under this
section.
   (B) For purposes of this paragraph, "employee" shall have the same
meaning as set forth in Section 810.2 of the Government Code.
   (2) The health authority shall not be considered to be an agency,
division, department, or instrumentality of the county and shall not
be subject to the personnel, procurement, or other operational rules
of the county.
   (3) Notwithstanding any other provision of law, any obligations of
the health authority, statutory, contractual, or otherwise, shall be
the obligations solely of the health authority and shall not be the
obligations of the county, unless expressly provided for in a
contract between the authority and the county, nor of the state.
   (4) Except as agreed to by contract with the county, no liability
of the health authority shall become an obligation of the county upon
either termination of the health authority or the liquidation or
disposition of the health authority's remaining assets.
   (e) (1) To the full extent permitted by federal law, the
department and the health authority may enter into contracts to
provide or arrange for health care services for any or all persons
who are eligible to receive benefits under the Medi-Cal program.  The
contracts may be on an exclusive or nonexclusive basis, and shall
include payment provisions on any basis negotiated between the
department and the health authority.  The health authority may also
enter into contracts for the provision of health care services to
individuals including, but not limited to, those covered under
Subchapter XVIII (commencing with Section 1395) of Chapter 7 of Title
42 of the United States Code, individuals employed by public
agencies and private businesses, and uninsured or indigent
individuals.
   (2) Notwithstanding paragraph (1), or subdivision (f), the health
authority may not operate health plans or programs for individuals
covered under Subchapter XVIII (commencing with Section 1395) of
Chapter 7 of Title 42 of the United States Code, or for private
businesses, until the health authority is in full compliance with all
of the requirements of the Knox-Keene Health Care Service Plan Act
of 1975 under Chapter 2.2 (commencing with Section 1340) of Division
2 of the Health and Safety Code, including tangible net equity
requirements applicable to a licensed health care service plan.  This
limitation shall not preclude the health authority from enrolling
persons pursuant to the county's obligations under Section 17000, or
from enrolling county employees.
   (f) The board of supervisors may transfer responsibility for
administration of county-provided health care services to the health
authority for the purpose of service of populations including
uninsured and indigent persons, subject to the provisions of any
ordinances or resolutions passed by the county board of supervisors.
The transfer of administrative responsibility for those health care
services shall not relieve the county of its responsibility for
indigent care pursuant to Section 17000.  The health authority may
also enter into contracts for the provision of health care services
to individuals including, but not limited to, those covered under
Subchapter XVIII (commencing with Section 1395) of Chapter 7 of Title
42 of the United States Code, and individuals employed by public
agencies and private businesses.
   (g) Upon creation, the health authority may borrow from the county
and the county may lend the authority funds, or issue revenue
anticipation notes to obtain those funds necessary to commence
operations or perform the activities of the health authority.
Notwithstanding any other provision of law, both the county and the
health authority shall be eligible to receive funding under
subdivision (p) of Section 14163.
   (h) The county may terminate the health authority, but only by an
ordinance approved by a two-thirds affirmative vote of the full
board.
   (i) Prior to the termination of the health authority, the county
shall notify the department of its intent to terminate the health
authority.  The department shall conduct an audit of the health
authority's records within 30 days of notification to determine the
liabilities and assets of the health authority.  The department shall
report its findings to the county and to the Department of Managed
Care within 10 days of completion of the audit.  The county shall
prepare a plan to liquidate or otherwise dispose of the assets of the
health authority and to pay the liabilities of the health authority
to the extent of the health authority's assets, and present the plan
to the department and the Department of Managed Care within 30 days
upon receipt of these findings.
   (j) Any assets of the health authority derived from the contract
entered into between the state and the authority pursuant to Article
2.97 (commencing with Section 14093), after payment of the
liabilities of the health authority, shall be disposed of pursuant to
the contract.
   (k) (1) The governing body shall consist of 18 voting members, 14
of whom shall be appointed by resolution or ordinance of the board as
follows:
   (A) One member shall be a member of the board or any other person
designated by the board.
   (B) One member shall be a person who is employed in the senior
management of a hospital not operated by the county or the University
of California and who is nominated by the San Francisco Section of
the Westbay Hospital Conference or any successor organization, or if
no such successor organization, a person who shall be nominated by
the Hospital Council of Northern and Central California.
   (C) Two members, one of whom shall be a person employed in the
senior management of San Francisco General Hospital and one of whom
shall be a person employed in the senior management of St. Luke's
Hospital (San Francisco).  If San Francisco General Hospital or St.
Luke's Hospital, at the end of the term of the person appointed from
its senior management, is not designated as a disproportionate share
hospital, and if the governing body, after providing an opportunity
for comment by the Westbay Hospital Conference, or any successor
organization, determines that the hospital no longer serves an
equivalent patient population, the governing body may, by a
two-thirds vote of the full governing body, select an alternative
hospital to nominate a person employed in its senior management to
serve on the governing body.  Alternatively, the governing body may
approve a reduction in the number of positions on the governing body
as set forth in subdivision (p).
   (D) Two members shall be employees in the senior management of
either private nonprofit community clinics or a community clinic
consortium, nominated by the San Francisco Community Clinic
Consortium, or any successor organization.
   (E) Two members shall be physicians, nominated by the San
Francisco Medical Society, or any successor organization.
   (F) One member shall be nominated by the San Francisco Labor
Council, or any successor organization.
   (G) Two members shall be persons nominated by the beneficiary
committee of the health authority, at least one of whom shall, at the
time of appointment and during the person's term, be a Medi-Cal
beneficiary.
   (H) Two members shall be persons knowledgeable in matters relating
to either traditional safety net providers, health care
organizations, the Medi-Cal program, or the activities of the health
authority, nominated by the program committee of the health
authority.
   (I) One member shall be a person nominated by the San Francisco
Pharmacy Leadership Group, or any successor organization.
   (2) One member, selected to fulfill the appointments specified in
subparagraph (A), (G), or (H) shall, in addition to representing his
or her specified organization or employer, represent the discipline
of nursing, and shall possess or be qualified to possess a registered
nursing license.
   (3) The initial members appointed by the board under the
subdivision shall be, to the extent those individuals meet the
qualifications set forth in this subdivision and are willing to
serve, those persons who are members of the steering committee
created by the county to develop the local initiative component of
the Medi-Cal state plan in San Francisco.  Following the initial
staggering of terms, each of those members shall be appointed to a
term of three years, except the member appointed pursuant to
subparagraph (A) of paragraph (1), who shall serve at the pleasure of
the board.  At the first meeting of the governing body, the members
appointed pursuant to this subdivision shall draw lots to determine
seven members whose initial terms shall be for two years.  Each
member shall remain in office at the conclusion of that member's term
until a successor member has been nominated and appointed.
   (l) In addition to the requirements of subdivision (k), one member
of the governing body shall be appointed by the Mayor of the City of
San Francisco to serve at the pleasure of the mayor, one member
shall be the county's director of public health or designee, who
shall serve at the pleasure of that director, one member shall be the
Chancellor of the University of California at San Francisco or his
or her designee, who shall serve at the pleasure of the chancellor,
and one member shall be the county director of mental health or his
or her designee, who shall serve at the pleasure of that director.
   (m) There shall be one nonvoting member of the governing body who
shall be appointed by, and serve at the pleasure of, the health
commission of the county.
   (n) Each person appointed to the governing body shall, throughout
the member's term, either be a resident of the county or be employed
within the geographic boundaries of the county.
   (o) (1) The composition of the governing body and nomination
process for appointment of its members shall be subject to alteration
upon a two-thirds vote of the full membership of the governing body.
  This action shall be concurred in by a resolution or ordinance of
the county.
   (2) Notwithstanding paragraph (1), no alteration described in that
paragraph shall cause the removal of a member prior to the
expiration of that member's term.
   (p) A majority of the members of the governing body shall
constitute a quorum for the transaction of business, and all official
acts of the governing body shall require the affirmative vote of a
majority of the members present and voting.  However, no official
shall be approved with less than the affirmative vote of six members
of the governing body, unless the number of members prohibited from
voting because of conflicts of interest precludes adequate
participation in the vote.  The governing body may, by a two-thirds
vote adopt, amend, or repeal rules and procedures for the governing
body.  Those rules and procedures may require that certain decisions
be made by a vote that is greater than a majority vote.
   (q) For purposes of Section 87103 of the Government Code, members
appointed pursuant to subparagraphs (B) to (E), inclusive, of
paragraph (1) of subdivision (k) represent, and are appointed to
represent, respectively, the hospitals, private nonprofit community
clinics, and physicians that contract with the health authority, or
the health care service plan with which the health authority
contracts, to provide health care services to the enrollees of the
health authority or the health care service plan.  Members appointed
pursuant to subparagraphs (F) and (G) of paragraph (1) of subdivision
(k) represent and are appointed to represent, respectively, the
health care workers and enrollees served by the health authority or
its contracted health care service plan, and traditional safety net
and ancillary providers and other organizations concerned with the
activities of the health authority.
   (r) A member of the governing body may be removed from office by
the board by resolution or ordinance, only upon the recommendation of
the health authority, and for the following reasons:
   (1) Failure to retain the qualifications for appointment specified
in subdivisions (k) and (n).
   (2) Death or a disability that substantially interferes with the
member's ability to carry out the duties of office.
   (3) Conviction of any felony or a crime involving corruption.
   (4) Failure of the member to discharge legal obligations as a
member of a public agency.
   (5) Substantial failure to perform the duties of office,
including, but not limited to, unreasonable absence from meetings.
The failure to attend three meetings in a row of the governing body,
or a majority of the meetings in the most recent calendar year, may
be deemed to be unreasonable absence.
   (s) Any vacancy on the governing body, however created, shall be
filled for the unexpired term by the board by resolution or
ordinance.  Each vacancy shall be filled by an individual having the
qualifications of his or her predecessor, nominated as set forth in
subdivision (k).
   (t) The chair of the authority shall be selected by, and serve at
the pleasure of, the governing body.
   (u) The health authority shall establish all of the following:
   (1) A beneficiary committee to advise the health authority on
issues of concern to the recipients of services.
   (2) A program committee to advise the health authority on matters
relating to traditional safety net providers, ancillary providers,
and other organizations concerned with the activities of the health
authority.
   (3) Any other committees determined to be advisable by the health
authority.
   (v) (1) Notwithstanding any provision of state or local law,
including, but not limited to, the county charter, a member of the
health authority shall not be deemed to be interested in a contract
entered into by the authority within the meaning of Article 4
(commencing with Section 1090) of Chapter 1 of Division 4 of Title
                                          1 of the Government Code,
or within the meaning of conflict-of-interest restrictions in the
county charter, if all of the following apply:
   (A) The member does not influence or attempt to influence the
health authority or another member of the health authority to enter
into the contract in which the member is interested.
   (B) The member discloses the interest to the health authority and
abstains from voting on the contract.
   (C) The health authority notes the member's disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.
   (D) The member has an interest in or was appointed to represent
the interests of physicians, health care practitioners, hospitals,
pharmacies, or other health care organizations.
   (E) The contract authorizes the member or the organization the
member has an interest in or represents to provide services to
beneficiaries under the authority's program or administrative
services to the authority.
   (2) In addition, no person serving as a member of the governing
body shall, by virtue of that membership, be deemed to be engaged in
activities that are inconsistent, incompatible, or in conflict with
their duties as an officer or employee of the county or the
University of California, or as an officer or an employee of any
private hospital, clinic, or other health care organization.  The
membership shall not be deemed to be in violation of Section 1126 of
the Government Code.
   (w) Notwithstanding any other provision of law, those records of
the health authority and of the county that reveal the authority's
rates of payment for health care services or the health authority's
deliberative processes, discussions, communications, or any other
portion of the negotiations with providers of health care services
for rates of payment, or the health authority's peer review
proceedings shall not be required to be disclosed pursuant to the
California Public Records Act, Chapter 5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, or any similar
local law requiring the disclosure of public records.  However,
three years after a contract or amendment to a contract is fully
executed, the portion of the contract or amendment containing the
rates of payment shall be open to inspection.
   (x) Notwithstanding any other provision of law, the health
authority may meet in closed session to consider and take action on
peer review proceedings and on matters pertaining to contracts and to
contract negotiations by the health authority's staff with providers
of health care services concerning all matters relating to rates of
payment.  However, a decision as to whether to enter into, amend the
services provisions of, or terminate, other than for reasons based
upon peer review, a contract with a provider of health care services,
shall be made in open session.
   (y) The health authority shall be deemed to be a public agency for
purposes of all grant programs and other funding and loan guarantee
programs.
   (z) Contracts under this article between the State Department of
Health Services and the health authority shall be on a nonbid basis
and shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
   (aa) (1) The county controller or his or her designee, at
intervals the county controller deems appropriate, shall conduct a
review of the fiscal condition of the health authority, shall report
the findings to the health authority and the board, and shall provide
a copy of the findings to any public agency upon request.
   (2) Upon the written request of the county controller, the health
authority shall provide full access to the county controller all
health authority records and documents as necessary to allow the
county controller or designee to perform the activities authorized by
this subdivision.
   (bb) A Medi-Cal recipient receiving services through the health
authority shall be deemed to be a subscriber or enrollee for purposes
of Section 1379 of the Health and Safety Code.
  SEC. 4.  Section 14139.53 of the Welfare and Institutions Code is
amended to read:
   14139.53.  (a) The department shall develop criteria to ensure
that pilot project sites maintain fiscal solvency, including, but not
limited to, the following:
   (1) The capability to achieve and maintain sufficient fiscal
tangible net equity within a timeframe to be specified by the
department for each pilot project site.
   (2) The capability to maintain prompt and timely provider
payments.
   (3) A management information system that is approved by the
department and is capable of meeting the requirements of the pilot
program.
   (b) Any pilot project established under this article shall
immediately notify the department in writing of any fact or facts
that are likely to result in the pilot project or the long-term care
services agency being unable to meet its financial obligations.  The
written notice shall describe the fact or facts, the anticipated
financial consequences, and the actions that will be taken to address
the anticipated consequences, and shall be made available upon
request unless otherwise prohibited by law.
